What is Embezzlement?

Embezzlement occurs when a person deceitfully misuses money or property entrusted to his/her care by another party. Embezzlement can range from a cashier simply pocketing a few bills to the chief financial officer of a large company diverting funds to a personal bank account.

Embezzlement occurs when a person deceitfully misuses money or property entrusted to his/her care by another party. Embezzlement can range from a cashier simply pocketing a few bills to the chief financial officer of a large company diverting funds to a personal bank account.

For embezzlement charges to stick, four things should be established:

1. Fiduciary relationship (holding in trust of confidence) between perpetrator and victim
2. Perpetrator possessed property or money in question
3. Perpetrator assumed rights to property/money
4. Intentional use or conversion of property/money

In proving conversion, it must be established that the property/money was interfered with. That is, it wasn’t simply relocated. However, the true measure of embezzlement is not the thief’s gain but the legal owner’s loss.

An embezzler often falsifies records to conceal his/her theft. Some of the most successful embezzlers thrived for years due to a great talent for concealing fraudulent transactions.

Some embezzlers steal small sums over a long time, others a single large sum in one go. Law enforcement experts say they detected the crime due to things like:

1. Late or suspicious documents
2. Missing transaction records
3. Mysterious profit fluctuations
4. Dramatic changes in an employee’s spending patterns
5. Changes in employee behavior, such as being suspiciously eager to work overtime, etc.

Recent Incidents of Embezzlement

Through the 90s, Genovese crime family thug, Joseph Lore, embezzled anywhere from $1-2 million from a New Jersey labor association. He did it mainly through ghost employees — plus threats and strong-arm tactics against labor leaders.

Kerry Tresselt, former bookkeeper of a Washington, DC ironworkers association embezzled over $350,000 from 1998 to 2001. While she stole over $30,000 from a ghost employee scam, she embezzled the bulk of it ($270,000) by simply writing herself checks using the association’s checking account.

Tresselt stole the rest of the amount by diverting funds from a US government grant to train ironworkers in Poland. To do this, she simply submitted fake billing statements for work she never did.

More recently, in 2005, several Aramark managers underreported profits from the company’s chain of vending machines located across the Eastern US. The money stolen per vending machine was not much — but the sum yielded by many machines over a long period was indeed substantial.

Embezzlement - Types & Penalties

Embezzlement can take place almost anywhere: businesses, unions, government coffers, etc. Classified by method, embezzlement takes on common forms, such as:

1. Underreporting Income – The embezzler then pockets the difference, as in the case of Aramark mentioned above
2. Creating Ghost Employees – Who then draw a salary from the payroll, as in the Joseph Lore case above
3. Setting Up False Accounts – The phantom vendor account supplies false billing statements so expenses seem legitimate, as in the Tresselt case above
4. Diverting Funds and Property – The embezzler, usually a fund manager, simply abuses a position of trust and diverts possession and ownership, as in the Tresselt case above
5. Employee Theft – When employees simply appropriate for themselves employer property, which is legitimately in their possession

Embezzlement can be charged as a felony in civil or criminal, state or federal court. It usually involves restitution, fines, and/or jail or prison time.

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